Global Digital Currency Regulatory Roundup: June 2015

In June, progress was made on long-brewing regulatory plans in both California and New York. The finalization of New York’s regulatory framework may have been the most visible action, but countries across the globe were also moving ahead—furthering their exploration into the possibilities for beefing up, or avoiding, regulation of digital currencies and how they are used.

United States

New York

The New York State Department of Financial Services released the final version of the BitLicense, its regulatory framework for digital currency companies. Modifications in the final version include clarifications about what constitute changes to company operations, which would require approval from the agency. According to the new language, a change is something “proposed to an existing product, service, or activity that may cause such product, service, or activity to be materially different from that previously listed on the application for licensing by the superintendent."

The final version of the framework also allows companies to fulfill both BitLicense and money-transmitter requirements with a single application. Companies have until August 8, 2015 to apply for a license.

California

The California State Assembly passed a bill that will require digital currency companies to be regulated in a manner similar to banks, which includes obtaining a renewable license from the Department of Business Oversight.

In order to obtain a license, applicants would need to pay a $5,000, non-refundable fee and disclose all virtual currency services that the company has previously provided. The bill is still under review in the California State Senate.

Around the Globe

Canada

The Canadian Standing Senate Committee on Banking, Trade and Commerce has released a report about digital currency and its regulation entitled, “Digital Currency: You Can’t Flip This Coin!”. In the report, the committee recommends using what it dubs a “light touch” when it comes to regulating the emerging technology.

In the report, the committee writes: “We believe that the best strategy for dealing with cryptocurrencies is to monitor the situation as the technology evolves… this technology requires a light regulatory touch – almost a hands off approach. In other words, not necessarily regulation, but regulation as necessary.”

United Kingdom

The people of Britain are seemingly behind the UK’s plans for regulating digital currency. In a recent poll, only about 13 percent of respondents disapproved of the government’s plans for tightening rules surrounding cryptocurrencies, with the majority saying that they either approved or were undecided about regulation.

In June, CoinDesk acquired a report from UK Home Office which offered up the possibility of the government creating its own digital currency in order to reap the benefits and decrease the risks associated with using currencies such as Bitcoin. “In particular, a digital currency owned by the UK government would be controlled by a central body ... It could also be pegged to a fiat currency, to reduce potential fluctuations in its value,” the report stated.

Financial Action Task Force Report

The international organization, the Financial Action Task Force, released a report recommending that government and regulatory bodies keep a close watch on digital currency exchanges and other means of digital currency transmission in hopes of stemming instances of money laundering and terrorist financing. Included among the recommendations is a suggestion that all exchanges be licensed and registered.

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